The price is right

San Diego Housing Commission plans to borrow against its housing stock to produce 1,035 additional affordable units throughout the city

Roberto Torres and Janet Ibarra (with their children, David, 8, and Josselyne, 6) are excited about the rehab of Arbor Village. Torres said, &#8220;We'll be able to buy more food .&#8201;.&#8201;. and my wife will be able to go back to school to learn English and nursing.&#8221; (Peggy Peattie / Union-Tribune)
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Roberto Torres and Janet Ibarra (with their children, David, 8, and Josselyne, 6) are excited about the rehab of Arbor Village. Torres said, “We'll be able to buy more food . . . and my wife will be able to go back to school to learn English and nursing.” (Peggy Peattie / Union-Tribune)
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When San Diego got the go-ahead two years ago to withdraw from the federal government's long-standing public housing program, it came with the proviso that the city create a relatively modest 350 new housing units for low-income households.

The feds would be happy to learn that the city's housing agency intends to nearly triple that, thanks to a battered economy that has greatly depressed housing values.

Next month, the San Diego Housing Commission will bring to the City Council a plan to borrow up to $102.6 million against more than 1,200 of its former public housing rentals to produce 1,035 additional subsidized units throughout the city over the next five years.

The commission's housing stock has an estimated value of more than $140 million.

In some cases, the agency will be able to acquire distressed rental projects, purchase vacant land or partner with developers to construct new housing affordable to lower-income households at a time when financing for such projects is scarce.

The commission has accumulated a list of more than 40 properties, including undeveloped land, complexes in need of renovation and partially completed projects in financial distress.

“What we're trying to do is take what the marketplace offers us, and with values down and owners looking to sell, it's a good time for San Diego to acquire and hold housing for affordable use going into the future,” said Rick Gentry, the commission's chief executive.

“What we're achieving here is housing that will remain affordable for the next 55 years.”

The proposal, which would be phased in over three to five years, is regarded as a considerable improvement over an initial plan to limit production to 350 affordable units.

It is also welcome news to affordable housing developers, many of whom have seen their projects stalled for months because of frozen voter-approved bond funding from the state and a scarcity of corporate investors.

Affordable housing developer Hunter L. Johnson of Long Beach-based LINC Housing Corp. says his planned multimillion-dollar rehab of a nearly 30-year-old complex in the Lincoln Park neighborhood would not have been possible without the commission's financial assistance, which includes purchase of the site for $6.4 million.

Johnson said the 112-unit Arbor Village complex is run-down, and in some cases the two- and three-bedroom units were overcrowded. Once the $22.5 million project is completed next year, monthly rents will range from as low as $447 for a one-bedroom apartment to $594 to $1,159 for a three-bedroom unit.

“The project would continue to deteriorate if it didn't stay in the hands of someone who would do a complete rehab,” said Johnson, president of LINC. “Some housing and redevelopment agencies sit on their hands and say, ‘We don't know what to do.’ Others are being very creative in using the resources they have to provide affordable housing, and the commission is in that latter group.”

When the city exited the decades-long public housing program, it was permitted to retain ownership of its 1,371 units, scattered throughout the city from Carmel Valley to San Ysidro. It also was given vouchers by the federal government to subsidize tenants' rents at those properties or elsewhere in the county if they choose to move.